Working capital; it’s what makes or breaks a business. Most businesses that fail do so because they don’t have enough cash at hand. They might have great clients, fantastic assets, and everything else going for them, but they need actual cash to continue operating. Here’s what you need to know about building your working capital.
If your cash flow isn’t where it should be, start by getting discounts on your expenses. If you’ve been in business for a while, it may be time to negotiate new rates for your vendors. Take a hard look at expenses that may be optional and consider reducing them now. Things like insurance may change from year to year, while things like rent often remain more static.
For asset-heavy companies, such as the retail sector, periodic liquidations are often necessary to start purchasing new inventory and making investments in business operations. Look for assets that you’ve been keeping around for no reason; they may be valuable regarding liquidity. There may even be assets such as former equipment that you no longer use.
If you have a shortfall regarding your expenses, the time to take out loans or find investors is now. Letting the situation linger will only make it worse. Many businesses need to take out loans or cash advances in order to continue operating; it isn’t the sign of a failing business. A failing business is one that doesn’t get funding. There are several types of loans for different situations, such as lines of credit for companies that need flexible funding options.
Do you have a huge accounts receivable building? If you haven’t been able to collect from some of your clients, you may want to consider selling off your debts. You can sell off the long-term debts you have to a vendor that will collect on them for you; you’ll just get a percentage of the total amount of debt owed. This is especially ideal for a company that doesn’t have a dedicated collections department.
There are a number of things you can do to improve your working capital, from acquiring loans to reducing your expenses. While it’s not always possible to simply increase your income, it is often possible to control the amount that your organization is spending on overhead.
If you’re finding yourself strapped for cash now, the time is right to seek out additional liquidity. For more information, contact us at MY Company Funding today.